UK: Autumn Statement - Key Measures At A Glance

Last Updated: 5 December 2012
Article by Deloitte LLP

Most Read Contributor in UK, August 2017

By Sally Jones, Tax director

Key measures of general interest

Unusually, the single biggest revenue raising announcement has nothing to do with taxation - it's the sale of 4G bandwidth, which is expected to add £3.5bn to the Exchequer's coffers in 2012/13. That one measure accounts for almost 90% of the forecast revenue increases for the current year.

£5bn more tax is to be collected from Swiss bank accounts held by UK residents over the next 5 years. It will go some way towards paying for: the increase in the 100% annual investment allowance for plant & machinery to £250k from January for the next two years; the cancellation of the 3p increase in fuel duty that had been scheduled for January but which has now been scrapped; and the increase to the personal allowance by £235 to £9,440 in 2013/14.

Key measures for corporates

There are relatively few changes for corporates themselves, and they look to be good news. The main rate of corporation tax will fall to 21% from 2014/15. The new 100% deduction for the first £250k of spending on plant & machinery (up from £25k) for 2 years from 1 January is worth more than £50k per annum for taxpaying companies at the main rate.

The Chancellor made a big deal in his speech about new anti-avoidance measures effective from today. However, the fine print shows that the schemes concerned (mismatch schemes, property return swaps and manufactured payments) are very much minority sports involving structured treasury products - even the Chancellor's own forecasts calculate that closing them down won't raise anything. Banks won't be happy to see the bank levy increased to 0.130%, together with measures to put beyond doubt that they can't claim double tax relief for overseas bank levies suffered.

Implications for individuals

There will be new restrictions on pension tax relief from 2014/15. The lifetime limit for pension savings will reduce from £1.5m to £1.25m, and the annual tax free savings limit will reduce from £50k to £40k. The people most affected will be those who haven't had much opportunity to save for their pensions in the past, but are now in a position to save and want to do so over the remainder of their working life (perhaps as a result of promotion to management). We expect this to hit around 250,000 savers. The big question is whether the additional tax cost should be met by the employees or their pension funds.

The increase in the personal allowance from 2013/14 to £9,440 (which, for once, will benefit higher rate taxpayers as well as basic rate tax payers) will cost around £1bn per annum. The cancelled fuel duty rise will cost another £1.6bn. Although big numbers across the whole population, the average motorist will save just £1 per week, and the personal allowance increase is worth about the same.

Tax threshold increases for the higher income tax rate, inheritance tax and the capital gains tax annual allowance will limited to 1% (rather than linked to RPI) from 2014/15. That will raise around £1bn per annum, but obviously the effect won't be felt for more than a year.

Implications for employers

The important news here is on personal service companies. The Government has decided not to proceed with its proposal to tax those who meet the definition of a 'controlling person' at source. This is because HMRC think their new approach to policing IR35, along with the measures introduced in the public sector this year, is sufficient to prevent tax loss through disguised employment. This is clearly an area that will be kept under review.

Implications for entrepreneurial businesses

Raising financing is one of the key challenges facing entrepreneurial businesses. There were some welcome announcements today to help. Increasing the list of qualifying investments for stocks and shares ISAs to include shares traded on SME equity markets such as AIM is welcomed (although it would be even better if it were expanded to the unquoted market), as is news that the business bank is to deploy £1 billion and enable UK Export Finance to provide £1.5 billion in loans to finance small firms' exports. The key will be making the plethora of schemes understandable and accessible.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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